There is attached the first Progress Report by the Operations
Coordinating Board on NSC 125/2 and
NSC 125/6, “United States Objectives
and Courses of Action with Respect to Japan.” These NSC papers were assigned to the Board on
December 12, 1953; and this report covers the period through September
15, 1954 with the addition of the latest information available on the
Japanese economic situation. The report was approved by the Operations
Coordinating Board on October 27, 1954.
The Board noted that since September 15, 1954 an agreement on reparations
between Japan and Burma, mentioned on page 102 of the report, was initialed in Tokyo on September
25. It provides for payment by Japan of $20 million annually in goods
and services over a period of ten years and economic cooperation in the
form of joint enterprises with Japanese investment in the amount of $5
million annually for ten years. This agreement will be concluded
formally in Rangoon on November 3.
[Attachment]
Progress Report on NSC 125/2 and 125/6
“United States Objectives And
Courses Of Action With Respect To Japan”
(Policy approved by the President, August 7, 1952 and
June 26, 1953)
a. summary of major
actions
1. The United States has in the past two years concluded a number of
important agreements with Japan, including a Mutual Defense
Assistance Agreement, Treaty of Friendship, Commerce and Navigation,
and revision of the criminal jurisdiction provisions of the
Administrative Agreement. Joint agreement was also reached for
return of the Amami Oshima group to Japanese control.
2. During 1953 Japan incurred a serious balance of payments deficit
notwithstanding a continued high level of United States special
expenditures of about $785 million. This imbalance continued during
the early part of 1954. Corrective measures initiated by Japan in
October 1953 alleviated this condition. For the past six months
ending September 1954 a balance of payments surplus appeared even
though U.S. special expenditures declined to an annual rate of about
$550 to $600 million. Japan was admitted provisionally to the
General Agreement on Tariffs and Trade and the United States is
taking the lead in multilateral negotiations to bring Japan fully
into GATT. United States
preparations are underway for comprehensive United States–Japanese
tariff negotiations, which are scheduled for early 1955. Private
technical assistance arrangements and loans totalling $40 million by
the International Bank for Reconstruction and Development have been
made, but Japanese productivity is still deficient in important
fields. United States economic assistance to Japan consisted of a
grant of $10 million in local currencies to Japan under the
agricultural surplus program, and three short-term cotton loans
totalling $160 million by the Export-Import Bank. Japan’s
contribution to U.S. forces was reduced by $7 million. Negotiations
for settlement of the claims of the United States arising out of
economic assistance rendered during the occupation (GARIOA) were begun.
3. Japan has increased the size and strengthened the functions of the
Japanese defense forces, although the total is still well short of
that considered desirable by the Joint Chiefs of Staff. The Japanese
[Page 1762]
Diet has authorized
an expansion of Japanese defense forces to a total of 164,538 men,
including the new air force, and has empowered them to resist direct
attack. The United States provided increased military assistance to
Japan, and will continue to do so under the Mutual Defense
Assistance Agreement through substantial military grant-aid and
training programs. Some progress has been made toward the
establishment of a Japanese defense production base, largely through
the activation by offshore procurement of a broad range of
ammunition and explosive manufacturing facilities for small arms and
artillery. Plans are being formulated for the establishment of
limited capacity for production of certain tactical military
aircraft over the next two years. Arrangements have been completed
for a joint United States–Japanese industrial mobilization planning
group to study the development of a broader production base in
Japan.
4. Vigorous information programs have been carried on to give the
Japanese a better understanding of the United States and of world
problems and to combat leftist and neutralist influences.
5. Japan has continued to cooperate with the United States on
security export controls. Pursuant to understandings with the United
States it has gradually reduced the number of items embargoed to
Communist China to those multilaterally agreed.
b. operational considerations
bearing on policy
6. The NSC 125/2 and NSC 125/6 were designed to cover the
immediate post-Treaty period, during which the Japanese were
regaining their sovereignty. Certain important objectives have not
been achieved and it can be anticipated that troublesome problems in
relation to Japan will arise and continue. Economic difficulties,
ineffectual governmental leadership, pressure from Communist areas,
and reluctance in moving positively toward self-defense have not
been solved. In addition, there have arisen a serious increase in
neutralist sentiment, periodic flare-ups of anti-Americanism and an
intensification of communist overtures to Japan. New factors have
arisen in U.S. relations to Asia such as the SEATO and the proposed SEA economic grouping. As a
consequence, a complete review of NSC 125/2 and NSC 125/6
and of U.S. objectives and courses of action is recommended.
7. NSC 125/2, paragraph 7b(2) and
NSC 125/6, paragraph 3b(1) give
emphasis to the development of Japanese ground forces while Defense
has stressed the necessity for a force structure composed of
appropriate strength in naval and air forces as well as ground. The
Japanese on their part appear to question this force concept, laying
greater emphasis on air and naval forces. There is also feeling in
Japanese military circles that nuclear weapons require revision of
[Page 1763]
present defense
plans. Several problems such as joint planning, Japan’s role in the
Far East security picture, and ultimate initiation of withdrawal of
U.S. forces have become more important now that Japan has taken the
initial steps to expand its defense structure. A new NSC paper should take cognizance of
these problems in the light of the current situation.
c. emerging problems and future
actions
8. Economic Difficulties
Japan’s economic difficulties present an obstacle to the attainment
by the U.S. of certain major objectives in Japan, particularly in
respect to the strengthening of international economic
relationships, cooperation with other friendly nations of the Far
East, and the indigenous support of an adequate defense program.
There exists an uncertainty as to the ability of the Japanese
Government to continue and expand measures which recently improved
the balance-of-payments position in the face of diminishing U.S.
military expenditures. Japan’s financial future is further obscured
by the unsettled reparations arrangements with Southeast Asian
countries, which are also adversely affecting the development of a
healthy trade pattern. Decision has been made to establish an FOA mission in Tokyo. The prospective
decrease in U.S. special expenditures will increase the difficulties
of Japan attaining self-support by Japan, and the U.S. should,
therefore, give particular attention and emphasis to (1) reduction
of trade barriers, by negotiating with Japan at the GATT negotiations scheduled for
February 1955, and by encouraging friendly third countries to
negotiate similarly; (2) exercise of greater control over the
programming of U.S. Government expenditures in Japan, so as to
anticipate and ameliorate the effect of diminishing dollar receipts
from this source; (3) improvement of productivity, through a jointly
financed technical assistance program, and the investment of dollars
and local currencies; (4) provision of continuing support for the
Japanese defense structure through military assistance, defense
facilities assistance, and offshore procurement;3 (5) assistance
and encouragement in the development
[Page 1764]
of raw material availabilities, particularly
in Southeast Asia countries; (6) encouraging the Japanese to improve
their receptivity toward foreign private investment and to continue
and strengthen sound internal financial and economic measures to
improve their international position; (7) provision of economic aid
when necessary and appropriate predicating such aid on Japanese
participation and self-help.
9. Ineffective Political Leadership
Conservative groups are politically dominant but continue to be split
by personal rivalries rather than differences of principle. If these
groups could cooperate effectively they would control about
two-thirds of each House of the Diet, and would be able to carry out
policies on which they generally agree for economic stabilization,
control of leftist activity and stronger defense. Particularly
needed are government programs to awaken the nation to a sense of
international responsibility, to take legal measures against
Communists, and to combat the neutralist, anti-American tendencies
of many of the individuals in Japan’s educated groups. The U.S.
should do what it can to encourage effective conservative action in
Japan, although the immediate prospects of conservative merger and
effective government leadership are not good.
10. Inadequacy of Defense Measures
Measures undertaken by the Japanese Government to expand its
self-defense forces including tentative five-year plans, fall far
short of the goals set by the JCS.
In contrast to the JCS force goals
of 348,000 for ground forces, the Japanese Government has shown a
comparatively greater interest in expanding its air and naval
forces. Serious disappointment has been shown by the Japanese
Government in the alleged failure of the U.S. to make available the
17 naval vessels requested. However, a general support has been
obtained for the government’s defense program and there appears
[Page 1765]
to be a growing popular
acceptance of military institutions. In addition to the economic
situation, there are political and psychological factors which
impede the development of an adequate defense program. A growing
tendency is becoming evident on the part of the Japanese Government
to make any defense build-up dependent on increased U.S. military
and economic assistance and reduction in Japan’s contribution to the
maintenance of U.S. security forces in Japan. In view of the present
international picture in the Far East the pressures in this
direction can be expected to increase rather than to diminish. The
U.S. should continue programs of military assistance as well as
efforts to reach agreement with Japan on the size and strategic role
of its forces. Further progress toward the establishment of a
Japanese defense base adequate to meet U.S. objectives will be
dependent largely on the furnishing by the U.S. of technical
production services, facilities assistance, educational orders, and
a continuing offshore procurement program; and the development of
all these programs will call for a substantial cooperation by the
Japanese themselves. In view of Japan’s reluctance to act positively
and the economic situation, with the likelihood of diminishing U.S.
military assistance funds—particularly those authorized for offshore
procurement—the U.S. must be prepared to take measures to provide
specifically for this purpose, or accept a slow rate of development
in this field.
11. Attraction of Communist Trade
The consolidation of Communist power in Mainland China and North
Korea and its expansion into Southeast Asia are exerting pressure on
Japan to increase economic relations and to consider more seriously
establishment of political relations with Communist Asia. Japanese
ties, both political and economic, to the United States and the free
world will remain proportionately much greater, but under
foreseeable circumstances trade with the Asian mainland will
exercise a powerful attraction. If the Communists see fit to
encourage it, such trade could develop substantial magnitudes even
under present international multilateral limitations. While United
States influence on Japan and bargaining power would remain
considerably greater, the development of Communist trade will
probably tend to give the Japanese Government a greater sense of
freedom in dealing with the United States. A major purpose of
measures discussed under paragraph 8 above is to assist Japan in
resisting Communist attractions and align Japan more firmly with the
United States. It should be noted that Indochina itself is not of
great trade significance for Japan but the problem of Communist
attraction and pressure would be greatly increased by Communist
expansion into other areas of Southeast Asia.
12. Formation of Western Pacific Defense
Arrangement
[Page 1766]
NSC 5429/2,4 Section II, 2d
provides that the U.S. should “encourage the conditions which will
make possible the formation of, and be prepared to participate in, a
Western Pacific collective defense arrangement, including the
Philippines, Japan, the Republic of China, and the Republic of
Korea, eventually linked with the Southeast Asia security structure
and ‘ANZUS’ “. This policy
statement clearly accords with the course of action set forth both
in NSC 125/2, para 7a(4), which
provides that the U.S. should encourage Japan and the free countries
of the Pacific area to develop relationships which will contribute
to their security, and in NSC 125/6,
para 3a(2), which provides that the U.S. should continue to explore
the possibilities of collective security arrangements in the Pacific
area which would include Japan. The problem of developing a sense of
interdependence in the area, which is clearly the necessary
prerequisite to the establishment of a security organization of the
nature contemplated, and U.S. actions taken to overcome this
difficulty, are discussed on pp. 9–11 of Annex A. In particular a
resolution of outstanding issues between Japan and Korea and the
settlement of the reparations and other questions between Japan and
the Philippines, Indonesia, Burma and the Associated States are
prerequisites to the effective development of constructive political
relationships, economic cooperation and collective security
arrangements in the Far East.
13. Need for Intensified Information
Programs
The complex emotional reactions of the Japanese, particularly as
sensationally represented in their press, to United States actions
and policies, the threat of nuclear warfare, and the growth of
Communist power in Asia have tended more and more to prejudice
United States–Japanese relationships. To strengthen countermeasures
an intensive reevaluation both of the existing Psychological Strategy Program for Japan (PSB D–27) and of
its implementation by the various agencies concerned is necessary,
(pp. 14–16, of Annex A). The Inter-Agency Committee in Tokyo, which
was established to implement the psychological strategy plan has not
thus far been effective except for the handling of the Troop
Acceptance problem. The committee, which has met only infrequently,
has not been able to bring to bear the full strength of U.S.
capabilities in furtherance of our psychological objectives.
Ambassador Allison has been
asked to make recommendations as to how the committee may be made
more effective.
14. Psychosis Regarding Nuclear Weapons
[Page 1767]
The violence of Japanese reactions to any matter relating to nuclear
weapons is an element in all of our relations with Japan and raises
particular problems in connection with any further U.S. tests in the
Pacific as well as in relation to U.S. actions in the development of
peaceful use of nuclear energy.
15. A number of lesser problems require continuing United States
consideration:
- (a)
-
War Criminals
The continued incarceration of Japanese war criminals
sentenced by United States courts remains an important
source of friction between the United States and Japan
and creates a psychological climate which is not
conducive to full Japanese cooperation with the United
States. The expeditious handling of cases by the Board
of Clemency and Parole, to the end that only a hard core
of prisoners who committed the most heinous crimes
remain in prison by the end of 1955, is important to
implementation of United States objectives toward
Japan.
- (b)
-
Japanese Desire for Return of Ryukyus
and Bonins
The Japanese Government and people continue to desire the
return of the Ryukyu and Bonin Islands to Japan,
although public pressure for their return has declined
somewhat, and return of Amami Oshima to Japan was an
important source of good-will to the United States.
Because of the critical strategic importance of these
islands the United States must continue to impress upon
the Japanese its intention to retain control over them
pending the establishment of enduring conditions of
peace and stability in the Far East. (pp. 17–19 of Annex
A)
- (c)
-
UN
Membership
The Japanese Government continues to seek fuller
association with the United Nations and to press for
United States action in support of this. (pp. 8–9 of
Annex A)
d. extent of agency
interests
16. The Departments of State and Defense have been primarily involved
in implementation of NSC 125/2 and
NSC 125/6 with considerable
assistance by the United States Information Agency, the Foreign
Operations Administration, the Departments of Treasury and Commerce,
and other agencies. …
